If you have a traditional IRA account and have reached the age of 70 ½, you should probably consider using a Qualified Charitable Distribution (QCD) from your IRA to make your charitable contributions. A Qualified Charitable Distribution is a direct payment to the charity from your IRA. The amount of the charitable distribution reduces your income reportable on your tax return.
Why is this an advantage? Under the new tax law, the standard deduction increased for most taxpayers. This make it more likely that you are not using some or all of the itemized deduction of your giving. By using the QCD, the full amount is deducted from your income. Also, the QCD can reduce the impact of your Required Minimum Distributions.
Who should consider a QCD? Traditional IRA owners or beneficiaries who are at least 70 ½ in age. If this describes you, talk to your financial advisor or tax professional to discuss your specific situation.
Be aware that the distribution from the IRA must be made payable directly to the charity in order for it to qualify. Also, you will want to keep records of your distributions to provide to your tax preparer. Most IRA custodians will not report this information automatically.
Please consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and it is not a substitute for tax advice.
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.